Utility Week expert view: Karma Ockenden

“If UK water technology is going to be hauled out of the doldrums, it needs action from all stakeholders and a lead from government – and fast.”

Last week, I went to the launch of a report by the UK Water Research and Innovation Partnership (UKWRIP) into the future of UK water technology. Held in the House of Commons, it was a very well-attended affair, bustling with representatives from industry, government and the research community. The water minister put in an appearance. There was tea and cake.
You wouldn’t have guessed from the polite veneer that the report was actually delivering a very stark message to the very government, business leaders, researchers and others gathered to celebrate its publication – many of whom had also been party to its creation.
Put bluntly, the UK’s performance on the world water technology stage is abysmal. Our exports of all water-related goods total £1.5 billion a year, representing just 3 per cent of the global market. This supports 15,000 UK jobs, mainly in around just 400 SMEs.
Mark Lane, business and economy action group leader at UKWRIP, commented that at best the UK gets along in “an ad hoc, laissez-faire way” – very different to market leaders France, Germany and the US.
Our performance is particularly pitiful in the booming global markets of desalination, irrigation, membrane filtration and chemical treatment – so much so, the report advises UK companies not to waste their efforts even trying to build a significant presence here. But more broadly it says there is business to be done; the global water and sewerage market is worth $8.6 trillion to 2050 and $50 billion in the next six years alone.
So at whose door can we lay the blame for dismal international performance by a country renowned for the success of its own privatised water industry? Well, pretty much everyone involved, to one extent or another.
Let’s start with the regulated English and Welsh water companies. They invest £18 million in research and development annually, which is around 0.18 per cent of revenues. This is down from around £28 million in 2002/03 and compares unfavourably with, for example, the 0.4 per cent of revenues invested by French giants Veolia Environnement and Suez Environnement.
Moreover, academics report that water companies have neither the staff nor the resources to innovate; technologists say testing and validation can be painfully slow.
But who can blame water companies for not investing more enthusiastically in innovation? The regulatory regime they work within hasn’t encouraged it: there has been an absence of incentives to invest where there is no short-term prospect of an attractive return. Also, Ofwat’s five-yearly AMP schedules create a cyclical market rather than one that can consistently hawk its wares overseas.
The UK research community contains some solid expertise, has a strong track record and strives for scientific excellence. However, it falls down on commercialising its work and matching research with real-world needs.
Overarching the whole picture, the UK government has failed to coherently co-ordinate a partnership approach between water technology stakeholders. In particular, the report details that competitors have successfully set up and promoted “innovation clusters”, which are ideally government-driven and minister-led. Tax incentives and rigorous IP rules in Singapore, for example, has led to a doubling of the number of water technology companies there.
Despite this depressing picture, the report reckons that by 2030, the UK could increase its global market share to at least 10 per cent – a slice worth £8.8 billion, providing 71,000 jobs and involving 960 SMEs. They say we have strengths that can be built on, in particular: a robust research tradition, a high-performing domestic industry and an international reputation for fair play.
So how do we get from A to B? UKWRIP advocates a four-point plan of action: establish a coherent, unified voice with a dedicated executive team and board to lead the sector and co-ordinate strategy; focus on commercial opportunities and customer needs, not research for its own sake; set up national testing, validation and demonstration facilities; and implement a co-ordinated international marketing strategy.
UKWRIP intends to develop a costed, actionable business plan. Meanwhile, some progress is already evident. PR14 is far more open to innovation than previous price reviews. And a Defra/Ofwat Innovation Leadership Group has been set up to gauge the UK’s innovation efforts and to link activity to market needs.
At the report launch, water minister Dan Rogerson talked the talk. He said the market potential “really is apparent” and that the government was “alive to the possibilities”. He praised the report for its “clear and ambitious vision”.
But talk ain’t gonna cut it and Rogerson’s use of the word “vision” for a potential reality just six years out isn’t particularly confidence-inspiring. If UK water technology is going to be hauled out of the doldrums, it needs action from all stakeholders and a lead from government – and fast. UKWRIP says: “If we fail to catch up within three years, they [the competition] will be so far ahead that we will miss the boat.”

To view the full report, please visit http://www.ukwrip.org/publications/htecho-tapping-potential-fresh-vision-uk-water-technology